Student Loan Debt Market: Too Big To Fail
March 5, 2013
On Wednesday, February 27, 2013, the student loan ombudsman at the recently minted Consumer Finance Protection Bureau (CFPB), Rohit Chopra, declared yet another systemwithin the U.S. economy ‘too big to fail.’ While Sen. Warren is grilling Ben Bernanke on what exactly the Federal Reserve is doing to remedy the unacceptable influence big banks wield on the health and state of our economy, the student loan debt market, comprised of public and private lenders, has shot past $1 trillion and continues its relentless climb.
Last year, students borrowed $117 billion from the federal government alone—our most inexpensive and forgiving education creditor. [Although, if our ever-competent and productive legislators [sic] fail to reach an agreement by July 1st of this year, interest rates on subsidized Stafford loans will be hiked to 6.8%.]But, is this any surprise? The cost of college is increasing at a rate of 8% per year, five times the current national rate. This tuition inflation rate translates to a doubling of tuition every nine years. Of course, tuition is nowhere near the entirety of the cost of higher education. In fact, an investigation by Business Insider estimates an average of $70,000 in additional costs above the tuition sticker price, and that is just an undergrad number.
Some are lucky enough to be able to cover the cost of undergraduate and graduate degrees, but more are unable to do so without incurring debt.As you look toward your MBA degree and the multi-faceted investment it involves, take the time to objectively evaluate where a graduate management degree from your targeted institution(s) have the potential to take you. Do not sell yourself short or the institution, but approach this analysis soberly. It may well be that you conclude that you need to set your sights higher and, therefore, incur even more cost in order to track your future in the direction it needs to go. If you have the drive and are willing to make the commitment to do what it takes to get into a top tier school, then go after it. If that does not make sense for your career path and goals, however, then get what you need at less cost.
The numbers surrounding student loan debt are terrifying, both macro and micro (I speak from experience here). But, just as a fledgling company needs investment to grow and prosper, so do individuals. If you decide to take the plunge, then go all in. Sign up for a GMAT class, take trips to universities, apply for scholarships and grants, accept loans if necessary. After all, where is the reward without the risk? Just be sure to do all of these things prudently and with a clear head. Do not be duped into a system that will not reward your risk.Defaults will hurt us all.
Hurricane Sandy: GMAT Classes and Communication
October 29, 2012
To our GMAT students:
As always, we are committed to the success and well-being of our students and our faculty. As a business, we try our best to remain in operation during periods of inclement weather to provide information about class cancellations in your area and to provide assistance to ensure that you can continue with your studies with minimal disruptions.
We have a team of Kaplan representatives ready to help. However, due to increased call volumes, students may experience a delay in reaching an Enrollment and Experience representative by telephone or email. We appreciate your patience during this time. Please be assured that we remain absolutely committed to your educational success and want to do our part in easing any concerns you may have.
We will contact you if there are any changes to your regularly scheduled class. If you do not receive any notification, you should assume your class will meet as scheduled.
Most importantly, we hope you and your families stay safe during this time. Your safety and well-being is a primary concern, and we look forward to continuing to support you as best we can.
Avoid a GMAT Train Wreck
May 17, 2012
Ever since I started teaching GMAT classes, I have taken note of any references to standardized tests I come across in television shows and movies. In the six years of doing so, I have found that these references almost always follow the same pattern. One of the characters needs to take a standardized test that they find difficult or boring. In order to illustrate this to the other characters, they will read an example of one of the questions on the exam. Invariably, the question they read involves two trains leaving two different stations at two different times and traveling towards each other.
Because of this, rate problems that feature two trains (or cars or people or anything else) have a bit of a bum rap. These questions are seen, unjustly, as difficult, time consuming and complicated. However, by learning only a few basic rules, you can handle these questions quickly and correctly.
The first step is to make sure the trains leave at the same time. If one train leaves earlier than the other one, calculate the distance the earlier train will have travelled by the time the later train leaves. Subtract that distance from the distance originally separating the trains, and use the that new distance as the total distance.
The second step will depend on the exact type of problem. If the trains are coming towards each other or going away from each other, add their speeds. If one train is catching up to the other, subtract their speeds. Use this result as the total speed.
Once you have calculated the total distance and total speed, you can solve for the time as you would on any other rate question. You just plug these numbers into the same formula you used back in step one to find the earlier trains distance, which is distance = rate x time.
The problem below is a perfect example of this type of question. While it looks complicated at first, draw a diagram and then follow the steps outlined above to reach the correct answer.
Problem:
Train A left Centerville Station, heading towards Dale City Station, at 3:00 p.m. Train B left Dale City Station, heading toward Centerville Station, at 3:20 p.m. on the same day. The trains rode on straight tracks that were parallel to each other. If train A traveled at a constant speed of 30 miles per hour and Train B traveled at a constant speed of 10 miles per hour, and the distance between the Centerville Station and Dale City Station is 90 miles, when did the trains pass each other?
(A) 4:45 p.m.
(B) 5:00 p.m.
(C) 5:20 p.m.
(D) 5:35 p.m.
(E) 6:00 p.m.
Solution:
Begin as you do for any word problem, by understanding the basic situation. Two trains, 90 miles apart, start moving toward each other at different times. One train moves at 30 mph, the other at 10 mph. Our task is to determine the times at which the trains pass each other, which is to say when they will be at the same point on these 90-mile tracks.
Our story begins at 3:00 pm when train A leaves. It is going 30 mph. The next event happens at 3:20 pm when Train B leaves its station going 10 mph. In the 20 minutes before train B leaves, train A has travelled 10 miles. This leaves 80 miles of track between them when train B starts at 3:20. This is now our total distance.
The question is then, “How fast will the two trains close that distance?” Here we add the speeds to get total speed: 30 + 10 = 40.
So, at a combined rate of 40 mph, how long will it take them to close an 80-mile gap? Time = distance/speed. Thus, 80/40 = 2 hours to close the gap. It will be 5:20 at that point. Answer (C) is correct.
The GMAT isn’t about what you think it’s about
December 10, 2011
I’ve got a new crop of eager test-preppers just starting out on their road to GMAT success. Often, my classes will contain one or two folks with at least some prior GMAT experience, but this group is all green and it’s gonna be fun. However, before the fun can really get rolling I have to spend time drawing blood.
Many of the battles I must wage (and win) in the GMAT classroom are focused on preconceptions. Whether a student has GMAT history or is coming in blind, all will inevitably have several strongly held beliefs about the test and everything that comes along with it, including their ability to crack it. Sometimes, these beliefs will be their most significant road block on the way to hitting their target.
After last night’s class, a student stayed behind for some clarification on Data Sufficiency questions. This student—let’s call her Jane—believes that she does not know/remember how to do any math whatsoever. I have worked with many students that hold this belief, and I am always right about how ludicrous it is. Jane may well not remember much; she may not have had to use any of this kind of stuff since she was a sophomore in high school. The last time Jane was messing around with quadratic equations might not have ended so well. But, regardless of past experience, regardless of how rusty and dusty this content knowledge is, Jane can absolutely learn (or re-learn) what she needs to in order to become successful in her bid for b-school acceptance.
Jane and I covered the Data Sufficiency concepts that were tripping her up and she is now ready to move forward on those little buggers. But, I couldn’t let the conversation end there. Unless she gets over her preconception about her perceived lack of GMAT potential and ability, moving forward will be much harder than it could be. In addition, she simply won’t get as far.
So, we talked. We talked about her education, work, past, future, etc. We talked about what her application package is going to look like and where she wants to submit it. We talked about ways she can get up to speed on some of the content so she can really push on the core competencies, methods, and strategies she needs to learn in order to excel on the GMAT.
By the end of the conversation, she felt better—a little more confident, a little more capable. I am not going to let this go, however. Jane is not where she needs to be. But, she did end by saying something that was absolute music to my ears:
“I know that my biggest problem is my attitude. I know that. I’m gonna work on that.”
